Background Promoting a “Belt and Road” Initiative in Line with the Paris AgreementThe 2030 Agenda for Sustainable Development and the Paris Agreement call for a paradigm shift in low-carbon development goals. The “Belt and Road” Initiative (BRI), launched by China in 2013, could play a key role in promoting the implementation of the SDGs and the Paris Agreement. To promote BRI investments that align with the emissions pathway needed to achieve the Paris Agreement, this study as-sesses the demand for energy transition in selected Asian developing countries, establishes a baseline for power investments based on NDC targets, and pro-vides recommendations for policy makers and inves-tors to promote China’s cooperation with other devel-oping countries under the BRI to implement the Paris Agreement.This study analyzes the current power development of Vietnam, Pakistan and Indonesia, and their pow-er development under their NDC target scenarios and under enhanced low-carbon scenarios. By analyzing the investment in renewables and energy efficiency needed to meet these countries’ NDC and low-carbon scenarios, the study explores opportunities and chal-lenges for greening BRI power investments. Vietnam, Pakistan and Indonesia were selected based on their high vulnerability to climate change impacts and in-creasing energy demand.

Opportunities and Challenges for Belt and Road Overseas Investment in the Power Sector under the Paris Agreement

Greenovation Hub

- Vietnam, Indonesia and Pakistan Case Studies

“一带一路”绿色发展研究Greening Belt and Road

VietnamVietnam’s NDC target• Unconditional contribution: 8% GHG emission re-

duction by 2030 compared to BAU with domestic resources

• Conditional contribution: 25% GHG emission re-duction by 2030 compared to BAU with interna-tional support

Opportunities for enhanced low-carbon tran-sition1. Increasing end-user’s energy efficiency 2. Improving renewable energy generation technology

with declining investment costs

Figure: Vietnam power generation structure (GW) under the NDC and enhanced low carbon action scenarios 2014-2030

In the enhanced action scenario, based on Asian Devel-opment Bank data:• Vietnam would reduce its carbon emissions by 35

million tons compared to the NDC scenario.• New coal power investments would be reduced by 18

billion US dollars in the enhanced low-carbon tran-sition scenario.

• Renewable energy development would require an ad-ditional $5 billion investment.

IndonesiaIndonesia’s NDC targets• Unconditional target: 29% emission reduction by

2030 compared with the BAU scenario• Conditional target: 41% Emission reduction by

2030 compared with the BAU scenario with inter-national support

Figure: Power generation structure in Indonesia’s NDC scenario in 2030 (%)

Recommendations for greening “Belt and Road” power investments1. Use NDCs as a baseline in guiding the deci-

sion-making of BRI power investments. 2. Identify and manage the impacts of climate

change on power infrastructure in host countries and incorporate them into the feasibility assess-ment.

3. Focus on renewable energy projects to help diver-sify host countries’ power supply and strengthen energy security.

4. Take a stricter and more cautious approach to-wards coal investment, and limit construction of coal power. Where coal power is built, ensure that only very efficient, low emissions technology is used, including CCS.

5. Promote investment in energy efficiency, which has significant environmental and climate co-ben-efits.

6. Develop smart grids and regional grid connectiv-ity in Vietnam, Indonesia and Pakistan based on their national situations, and build high-voltage power grid for clean energy transmission.

Opportunities for enhanced low-carbon tran-sition1. Improving the technical level of coal-fired power

plants: According to IEA estimates, a 7.5 GW net reduction in coal capacity could be achieved.

2. Developing renewable energy: According to IRE-NA estimates, 107 MtCO2e could be reduced in the power sector per year by 2030.

PakistanPakistan’s NDC targets• With 40 billion US dollars of international support

in place, the GHG emissions would be reduced by 20% from the baseline scenario by 2030.

Figure: Carbon emissions of Pakistan by sector in 2030 under the NDC scenario (MtCO2e)

The China-Pakistan Economic Corridor (CPEC) is a flagship project of the BRI. The 13.8 GW of “early-harvest” power projects put into operation and planned by CPEC are dominated by hydro and coal projects, with some solar and wind. Unless exist-ing units are phased out in the future, the 25GW gen-eration capacity increase target by 2025 in Pakistan Vision 2025 will be contributed primarily by CPEC projects.

Figure: CPEC power projects (MW)

Risks of CPEC energy investments1. Coal plants locking Pakistan on a high-carbon emis-

sion pathway2. Potential financial and reputational losses for ex-

isting sub-critical coal power plants due to possible retrofitting with CCS and strengthened climate and environmental standards

3. Dependence on imported fuels not improved, as some coal power plants still use imported coal

4. Increased conflicts between water and energy

Figure: Comparison of power generation mix in Pakistan in 2030 including CPEC projects

Opportunities for enhanced low-carbon tran-sition1. Adopting energy efficient technologies in power

generation and end-use energy consumption2. Stopping construction of new coal power projects 3. Vigorously developing renewable energy By 2030, a reduction in annual emissions of 33.8 Mt-CO2e could be achieved under the above development path.

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